Limits on use of employee's HRA when her spouse's HSA takes over payment of health premiums

[Sarah R]

An employer sponsors a stand alone HRA and one participant is enrolled in an HSA through her spouse's employer. The participant had previously only used the HRA to pay the health insurance premiums on the HDHP. Now, the spouse's employer will be paying these premiums and she wants to start using her HRA for other expenses such as prescriptions and non-preventative medical care. If she stops her contributions to the HSA, would she be able to begin using the HRA for any purpose immediately (it is a General Purpose HRA) or would she have to wait until the calendar year in which she had no contributions to the HSA? Also, if she still has balance in the HSA at the time she ceases her HSA contributions, does that have any impact on her availability to use the HRA for any purpose? Note that the HRA plan is run on an off calendar plan year.

Thank you!

[@zbenefits]

Hi Sarah,

The IRS requires that individuals have a minimum deductible of $1,300/year ($2,600/year for families) on their health insurance from all sources (including HRAs) in order to make tax-deductible contributions to their Health Savings Account (HSA).

One needs to simply add a required "HSA-Deductible" to your HRA to ensure you are compliant with these IRS regulations. However, there are some expenses that can be reimbursed through your HRA without regard to your HSA-Deductible (we call this "first-coverage"). These expenses include:

• Health insurance premiums
• Wellness/preventative care (e.g. checkups, mammograms, smoking cessation, weight loss, etc)
• Expenses resulting from accidents
• Dental expenses
• Vision expenses

Your HRA plan administrator should be able to assist with this.

One thing I would add to this Sarah, if the HRA has more than one participant ​(excluding dependents) it may be out of compliance with the "market reforms" of the ACA.

[GBurns]

Contributions to an HSA require coverage under an eligible HDHP. But, that is not an issue in this case.

The employer will be paying the premium and the HRA will not be used for premiums, but will only be used for out-of-pocket expenses. In this case, there are no restrictions on using the funds in the HSA for eligible medical expenses even though she has an HRA for the same purpose. However, remember that you can only reimburse or pay for an eligible medical expense only once. No double dipping.

She can start using the HRA as soon as she is not covered under the HDHP. There are no restrictions on the availability of the HSA funds for eligible medical expenses. However, I suggest that she clear this with her HSA Administrator.